The dollar is smiling. A graph of the dollar against a trade weighted index this year looks like a smile – dipping 7 per cent, then making a long flat curve before curling up into a big grin in the past few weeks, when it has risen 10 per cent. It is now up for the year.

To explain this, the so called Dollar Smile Hypothesis advanced by Stephen Jen, Morgan Stanley’s currency strategist, is useful. This held that the dollar had a “convex” relationship to US economic growth.